As can be seen we have just broken out of a small triangle, which forewarns that one more move in the direction of the trend will be seen. This rally has begun and we should see a top near 1,134, from where we should see the begining of wave 3 down.A break below 1,114.84 will confirm, that a top is in place for a move down to next support near 1,076.
Today the S&P went straight over 1140.
ReplyDeleteIs wave 3 down now obsolete?
I'd have to sell my short then with losses :/
Hi Adolescent.
ReplyDeleteSorry for not updating yesterday, but I have been very busy the last couple of days. I will update tonight, but let me say that wave 3 is not obsolete yet. It will be very hard to defende the count shown in the chart above if we see a break above 1,159.
I'm sure you have seen the potential invers Shoulder-Head-Shoulder formation, which would call for a move higher towards the 1247 area, but the last part of the rally hasn't been confirmed by the indicatores (negative divergence). That in itself isn't a argument to sell short, but is clearly a warning that momentum is fading and a change in trend could happen anytime.
If the rally from 1,011.52 to 1,129.23 is wave A the decline from 1,129.23 to 1,040.40 is wave B, then wave C would be equal to wave A at 1,158.11, therefore I will not say the wave 3 down is obsolete at this point, but accept a continuation towards 1,160, but not above.
A quick break below 1,129.23 and more importantly 1,124.63 would cancel the inverse Shoulder-Head-Shoulder formation and would force the bulls to close their positions and thereby accelerate the decline.
EWS
thanks for your detailed explanation, the S&P 500 moved down to 1.134 today, so if tomorrow and on Friday the index declines again, the inverse SH_H_SH Formation would already be cancelled ;-)
ReplyDelete